TMI Blog2017 (5) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... t: 30-01-2014 passed by the Commissioner of Income Tax-(Appeals), Asansol for the assessment year 2010-11. 2. It is noticed that none appeared on behalf of assessee. The ld. DR submits that the issue involved is that an addition was made by invoking the provisions of section 40(a)(ia) of the Act for non deduction of TDS on the payments made to Labour Sardars and the CIT-A deleted the addition by holding that the Labour Sardars are not labour suppliers and are facilitators for payment. In these circumstances, we proceed to hear the ld.DR and perusing the material available on record and dispose off the same on merits on the basis of material available on record. 3. The only issue in this appeal of revenue is to be decided as to whether the CIT-A justified in deleting the addition of ₹ 1,26,52,944/- made on account of payment of wages to labour sardars for non deduction of TDS in the facts and circumstances of the case. 4. The brie facts of the case are that the assessee being an individual filed his e-return on 27-09-2010 disclosing total income of ₹ 21,29,065/- and that the assessee is engaged in contractual work. Statutory notices u/s. 143(2)/142(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iers of labourers but facilitators for payment of wages. d. That the alleged labour leaders are by themselves labours as visible in labour register. e. The sum was debited in Profit and Loss Account as 'wages' and not payment to contractors. In support evidence relied upon are:- a. Certificate of Railway Contractors Labour Union (W.B.) Katwa Branch. b. Disbursement register where payment to labours were made at ₹ 130/- per day. c. Certain case decision in favour of assessee. 24. The matter is examined. In this case the alleged labour contractor is undoubtedly a labourer himself. He gets the same sum as any other labourer i.e. at ₹ 130/- per day. The entire affair is managed through Trade Union. Further contract is executed by him and he has not subcontracted any part of work to execute the contract. The fact is that the so called 'labour sardars 'are not suppliers of labourers but facilitators for payment of wages. 25. Considering all aspects the case as discussed above, I hold that the payments to labour sardars are not the ones falling in ambit of section 194C. Accordingly I direct Assessing Officer to delete t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case has no locus standi as labour contractor as a labour sardar and a labour contractor are as different as chalk and cheese. We find that there was no contract between the assessee and the labour sardars for supply of labourers and without which there cannot be any application of section 194C and as such the invocation of provision of section 40(a)(ia)is outside the scope and ambit of such enactment. In view of the matter, we are of the considered opinion that section 194C(2) being not applicable in this case, the disallowance of ₹ 74,33,210/- made by the Assessing Officer by invoking section 40(a)(ia) of the Income Tax Act, 1961 and sustained by the ld CIT(A) is hereby deleted. This ground of the assessee is allowed. 7.3. We also find that the decision of this tribunal in the case of ACIT vs Supreme Construction in ITA No. 1252/Kol/2013 dated 7.9.2016 had held as under:- 9. We have heard rival contentions of both the parties and perused the materials available on record. At the outset, we find that AO has called the labour contractors by issuing summons u/s. 131 of the Act and their statements were duly recorded. The AO failed to bring anything on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Samanwaya Vs. ACIT 34 SOT 332 has held as under : Business expenditure--Disallowance under s. 40(a)(ia)--Need for TDS under s. 194Crelating to payments made for disbursement of labour charges to labour Sardars--Assessee had specifically stated before the lower authorities that there is no contract between the assessee and the labour Sardars--Revenue authorities could not controvert the submission of the assessee in this respect-- Even before the Tribunal, the Department could not bring out any evidence by producing cogent material in respect of any contract between the assessee and the labour Sardars to contradict the submission of the assessee that there was no contract between the assessee and the labour Sardar--A contractor or a sub-contractor is engaged on the basis of a contract which is the most important essence of a contract job and is a primary requirement for the application of s. 194C-- Labour Sardars in the present case has no locus standi as labour contractor as a labour Sardar and a labour contractor are as different as chalk and cheese--There was no contract between the assessee and the labour Sardars for supply of labourers and without which there cann ..... 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